Latest data from accountancy firm EY shows Liverpool is the second-best location for foreign direct investment in the North West but remains a long way behind Manchester. Tony McDonough reports
Liverpool attracted eight foreign direct investment (FDI) projects in 2020, making it the 17th best performing city in the UK, according to new data from accountancy firm EY.
The city was the second-best location for FDIs in the North West during 2020 (accounting for 10% of the total) but remains a long way behind Manchester which attracted 35 FDI projects during the 12-month period. Warrington was third with six projects.
In 2018 and 2019 Liverpool also attracted eight FDIs and has stayed ahead of its decade average of 6.2 projects. However, while Manchester is a bigger city with a better connected international airport, concern will remain that the city is still further behind that it should be.
It is the eighth biggest city in the UK in terms of population so coming 17th in the FDI list would suggest it is punching well below its weight. Manchester, Liverpool and Warrington accounted for 56% (48) of the 85 projects secured by the North West.
It means the region overtook the South East (72) to become the UK’s third largest FDI location, behind Greater London and Scotland. Last year’s performance was a 16% improvement on 2019 when the region secured 73 projects. European projects were down 13% and UK projects fell by 12%.
Digital technology was the leading sector in the North West in 2020 with 19 projects (down from 23 in 2019), followed by business services with 11 (11) and machinery and equipment manufacture with seven (up from five).
Projects were most likely to involve sales and service activities (43 projects, up from 37 in 2019), manufacturing (18 projects, up from 14) and research and development (nine projects, up from seven).
Jenn Hazlehurst, EY’s Liverpool office managing partner, said: “These results mirror what I’m seeing in Liverpool and across the North West market – business resilience, confidence in the local economy and optimism about the opportunities for future growth here.
“I’m not surprised that digital is a key driver for inward investment projects in the region – it’s a sector where we are seeing significant growth and international deals activity.
“Our survey offers some guidance on how the UK can best support its transformation to a digital economy, with the investors we surveyed prioritising digital infrastructure, cybersecurity, entrepreneurship, and protecting intellectual property and data.
“Targeted policies here could continue to differentiate the UK in the competition to attract digital FDI. It’s great that Liverpool’s inward investment figures have remained stable and it provides a platform for future growth as the city recovers from the pandemic.
“Looking ahead it would be good to see more of an equitable distribution of investment throughout the region and more North West locations in the UK’s top 20 places for FDI.”
According to the EY survey, the key criteria investors will consider when looking outside London are the availability of the skills of the local workforce, the strength of local business networks, and access to regional grants and incentives for investment and R&D.
There are signs of a shift in attention beyond London, with the share of investors who say London is the UK’s most attractive destination falling from 46% in 2019 to 25% in 2020.
The UK as a whole ranked second in Europe for FDI projects in 2020, expanding its share of the European FDI market. While the UK again missed out on Europe’s top spot for FDI – for only the second year in the survey’s two-decade history – the gap was closed on 2019’s first-time leader France.